Sarah Schillaci/For The Star-LedgerA Superior Court judge in Morristown ruled the plan to turn the Parrot Mill Inn, formerly a bed and breakfast in Chatham, into a treatment center for compulsive gamblers was justly denied permission by the town board.

MORRISTOWN — Issuing a key decision in a lawsuit that has been bitterly contested for more than two years, a Superior Court judge ruled today that Chatham Borough’s board of adjustment acted properly when it denied permission to open a treatment center for gambling addicts.

Michael Osborne’s Tricare Treatment Services had been seeking to open the facility at the site of a former bed and breakfast, the historic Parrott Mill Inn on Main Street.

The adjustment board acted correctly in 2010 because the use as a treatment center was “fundamentally different” from the use as a B&B, Judge David Rand ruled in Morristown.

Osborne had contended that the treatment center was a “continuation of a nonconforming previous use.” The planning board initially approved the facility which would have housed five to seven patients at a time for four to five weeks of treatment. However, neighbors objected and successfully appealed that decision to the board of adjustment.

Rand said the planning board “should never have decided this matter” because it had “no jurisdiction.” Only the board of adjustment can issue a use variance, the judge ruled.

Despite the setback, Tricare’s attorney, Lawrence Litwin, still intends to pursue the case. A jury trial is scheduled to start on Oct. 15.

Litwin, who had claimed the board of adjustment acted improperly, is still seeking damages against the borough for other alleged violations. Contending that gambling addiction represents a disability, the lawsuit says the denial of the application violates the Americans With Disabilities Act and the New Jersey Law Against Discrimination.

Rand refused to let Litwin address the court after he issued his decision and also made several other rulings that went against Tricare.

Rand denied Litwn’s bid to amend his complaint for a sixth time and add the names of attorneys who have represented the borough as defendants in the lawsuit. Rand also ruled that Tricare must provide borough officials with information on its prospective patients, although he said the names could be left out and listed as initials.

Litwin had “no comment” on the decision, indicating only that he will continue to pursue the suit.

Attorney Denis Driscoll, representing the borough, said he was pleased with the judge’s decision.

“I’ve always thought these claims were without merit,” Driscoll said.

Even if Osborne wins the case, he won’t be opening his center at the Parrott Mill Inn. Following continuing delays in the lawsuit, a child-care center was approved at the site instead. Osborne is seeking damages against the borough that would help finance the opening of a treatment center somewhere else.